New Chinese Crypto Company Investigation Pegs Multiple Firms Who Are Mining Bitcoin Secretly
China is a country whose citizens are very pro-Bitcoin but whose government really isn’t. The Chinese government is in the news from time to time, for different moves made, trying to stifle the growth and development of a Bitcoin ecosystem.
In downtown Beijing for example, the controlling district government warned public businesses to not only turn down any Bitcoin or crypto related events but to also report same to the relevant authorities. This order was focused on restaurants, shopping malls, office buildings, hotels and pretty much any other place where an event like that could hold. Even though China is the world’s biggest market for all kinds of mining equipment, the government, it would seem, isn’t very open to the idea of Bitcoin because it has the capability to disrupt the usage of the Yuan as the proper legal tender.
These warnings and threats from the government have not stopped the usage of crypto in the country. As with most things like this, stakeholders have just found other ways to continue crypto business as usual, hiding it as much as possible from the government’s prying eyes. One of such businesses is mining.
According to a report published by Lylian Teng, some Chinese companies have put in considerable effort to continue mining Bitcoin, doing it covertly. Huatie Hengan, for example, has been secretly mining Bitcoin even without the knowledge of its investors. This caused some ruckus when investors found out but at that time, Huatie, the parent company, had reportedly lost $23million already.
Another Chinese company whose core business is internet gaming has also been secretly mining Bitcoins for a while. The firm, Wholeasy, is said to have been responsible for almost 18% of all 2018 sales from the major mining equipment manufacturer, Ebang. A media resources company called Mobcolor, which is also a subsidiary of Wholeasy, publicly disclosed sometime last year that creating a “mining centre for digital cloud computing” was in the works. Mobcolor was also said to have lent out 65,000 Ebang mining rigs to VDIT, a different firm.
RHY, a Chinese firm has however not been hiding its own mining activity. According to reports, RHY is officially listed on China’s National Equities Exchange and Quotations (NEEQ) system and has been setting up mining farms in Iran. RHY purportedly has a 450 MegaWatt farm with hundreds of thousands of miners. It would seem that more than a few Chinese miners are moving to Iran to take advantage of the country’s cheap power rates which can be as low as $0.006 per kilowatt-hour.
Banning Bitcoin in China
As stated earlier, there are efforts from the Chinese government to significantly stifle the growth of cryptocurrency in the country. Whether or not it’s actually possible, the government apparently feels that the cryptocurrency sector is very unsafe because of its fundamental deregulated nature. Recently, the National Development and Reform Commission (NDRC) sought for public opinion on a reviewed list of certain firms the commission wanted to either support, limit or completely remove.
Reportedly, the NDRC’s opinion on mining is that it
“should be phased out as they do not adhere to relevant laws and regulations, are unsafe, waste resources and pollute the environment.”
Earlier this year in January, it was observed that there were quite a few mystery miners who were successfully handling blocks on the network like never seen before. These mystery miners were more noticeable specifically on the Bitcoin (BTC) and Bitcoin Cash (BCH) networks. At the time, they contributed to around 20% of their respective chains but that number has dropped and it’s a bit lower now. These unknown miners could probably be tied to some of these clandestine mining endeavors.
Bitcoin in the U.S.-China Trade War
It has been noted in the past that among other factors, one of the reasons for the Bitcoin surge is the ongoing trade war between the United States and China. It’s been assumed that a lot of Chinese investors and businessmen are slowly making the shift to Bitcoin because of the fear that the Yuan might take a hit as a result of the economic disagreements. Going by this, there’s a strong chance that mining in China, whether clandestine or not, will not be subsiding anytime soon, regardless of government efforts target at miners.